Why people aged 50+ are choosing early retirement and what this means for employers?
Fast forward to today, and the recent Q2 2022 ManpowerGroup Employment Outlook Survey shows near-record hiring intentions as businesses bounce back from the pandemic, with +31% of employers looking to hire. In particular, demand is being led in the Services, IT and Telecoms, Banking, and Hospitality sectors, with the number of permanent roles continuing to rise along with the number of fully remote jobs being advertised in industries which have previously been office based, such as contact centres.
This hiring spree has resulted in steep competition between businesses for skilled candidates, exacerbating the existing talent shortage and creating a hiring headache for many businesses.
Looking closely at the employment market, data from the Office for National Statistics (ONS) shows that since the start of the pandemic, people over the age of 50 are increasingly choosing to retire early. Notably, the number of people who are economically inactive is up by over 400,000 since the start of the pandemic, representing 21.3% of the labour force. In fact, the number of workers aged 50 to 70 years old moving into economic inactivity between Q2 and Q3 2021 was 87,000 higher than the same period in 2019.
Noticeably, the ONS reports the proportion of men who say they no longer need to earn money by working is more than double the number of women giving the same response, with 42,000 men aged 50 to 70 with a degree or equivalent moving to economic inactivity between Q2 and Q3 2021. This represents almost half the total 87,000 difference reported.
In contrast to this male demographic moving into economic inactivity, women in the same education level and age bracket were five times less likely to choose to leave the workforce. We know a large part of this move is due to financial freedom, and we know that women over 50 hold fewer management positions in professional jobs with high paying salaries, which shows a clear correlation in this disparity.
According to the ONS, women in this demographic who did leave the workforce were more than four times more likely than men to have left for care purposes, contributing to the 87,000 figure.
So it seems that those aged over 50 who are leaving the workforce are not doing so due to one single overarching reason, but rather a mix of financial freedom and the care needs of elders needing to be met. One clear result, however, has been the labour market losing a significant amount of knowledge and experience at a time when a talent shortage is affecting employers across the board.
In order to bridge the gap, employers will need to adopt an approach that looks to attract and retain talent on all fronts. While there has been a lot of buzz around signing bonuses, salary increases and training opportunities for younger employees, employers cannot afford to neglect recently inactive workers over 50.
It is important to remember that this age group are not at the end of their career and can be brought back into the workforce with the right opportunity.
ManpowerGroup Director, Chris Gray, explains: “One way employers can ease the headache in hiring is to look at economically inactive groups, such as those aged 50+ who have taken early retirement.
Tapping into this market of experienced workers, with some potential training, upskilling and flexible working arrangements, could be the tonic to employers’ hiring headache.”
Tapping into the market of those aged 50+ who have taken early retirement, by providing training, upskilling and flexible working arrangements, could be the tonic to employers’ hiring headache
Our research shows that nearly 1 in 4 workers of all ages are looking for employers who provide benefits such as caregiving leave. Organisations who provide caregivers with choice and flexibility will attract and keep the best and brightest talent.
In addition, reskilling and upskilling of this demographic cannot be overlooked. TUC has found that older workers are the least likely to get training from their employers, with many feeling driven out as their needs to be upskilled are not being met.
But recent PwC research found that 77% of adults would learn new skills or completely retrain in order to future-proof their careers, irrespective of their age.
With the right working arrangements, upskilling and new opportunities, employers can make a powerful case to skilled and experienced, inactive workers to come back to work.
For more insights into the labour market trends, explore our MEOS Q2 2022 report.
